Signal transduction of the conserved transforming growth factor-β (TGFβ) family signaling pathway functions through two distinct serine/threonine transmembrane receptors, the type I and type II receptors. Endocytosis orchestrates the assembly of signaling complexes by coordinating the entry of receptors with their downstream signaling mediators. Recently, we showed that the C. elegans type I bone morphogenetic protein (BMP) receptor SMA-6, part of the TGFβ family, is recycled through the retromer complex while the type II receptor, DAF-4 is recycled in a retromer-independent, ARF-6 dependent manner. From genetic screens in C. elegans aimed at identifying new modifiers of BMP signaling, we reported on SMA-10, a conserved LRIG (leucine-rich and immunoglobulin-like domains) transmembrane protein. It is a positive regulator of BMP signaling that binds to the SMA-6 receptor. Here we show that the loss of sma-10 leads to aberrant endocytic trafficking of SMA-6, resulting in its accumulation in distinct intracellular endosomes including the early endosome, multivesicular bodies (MVB), and the late endosome with a reduction in signaling strength. Our studies show that trafficking defects caused by the loss of sma-10 are not universal, but affect only a limited set of receptors. Likewise, in Drosophila, we find that the fly homolog of sma-10, lambik (lbk), reduces signaling strength of the BMP pathway, consistent with its function in C. elegans and suggesting evolutionary conservation of function. Loss of sma-10 results in reduced ubiquitination of the type I receptor SMA-6, suggesting a possible mechanism for its regulation of BMP signaling.